The Double Standard for Keeping Capital and Labor Honest

There is far more corporate crime than crimes by unions. But corrupt labor officials are prosecuted and jailed, while executive thugs walk.

By ROBERT KUTTNER

The Wall Street scandal on top of the scandal is this: Not only do massive frauds by financial executives fleece consumers—and in the case of the 2008 collapse, crash the economy; the top executives who design and carry out the frauds are almost never prosecuted as individuals. The corporation typically is made to pay a fine, as if the frauds were mysteriously created by an entity rather than by people, in a kind of immaculate misconception.

On the labor front, meanwhile, in late March a reform slate narrowly won election to lead the UAW, ousting an incumbent regime that had been beset by weak leadership and corruption at the expense of the rank and file. Reformer Shawn Fain becomes union president, with a majority on the union executive board. This follows similar reform successes at the Teamsters and other unions, leading to a more effective labor movement overall.

In the run-up to this victory for reformers, dozens of corrupt UAW leaders were investigated and convicted for siphoning union funds. Two former UAW presidents, Gary Jones and Dennis Williams, were sentenced to prison.

The overwhelming majority of union leaders are honest and democratically accountable to the membership. But when corruption sets in, the government doesn’t mess around. According to Labor Department records, in the past decade there were 2,505 criminal investigations of union officials and 821 convictions. Hundreds did prison time, mostly for embezzlement of union funds.

During the same period, not a single top Wall Street executive went to jail, despite the fact that Wall Street frauds cost the economy trillions while the typical union misappropriation was in the thousands or low millions.

Union leaders are held accountable both by courageous rank-and-file organizing, and by law enforcement. Under the 1959 bipartisan Landrum-Griffin Act, passed in the wake of several union corruption scandals, Congress created an elaborate jurisprudence to keep incumbents from rigging elections and to prevent corrupt officials from looting union funds. The act, whose formal name is the Labor-Management Reporting and Disclosure Act, creates a bill of rights for rank-and-file workers, and civil and criminal penalties for violators.

By comparison, the system for keeping top corporate officials accountable is weak, riddled with loopholes, and poorly enforced. The occasional tough cop, like SEC chairman Gary Gensler, is the exception rather than the rule.

This country needs a Landrum-Griffin Act for corporations, that protects rights of other stakeholders and the general public, and that sends corrupt executives to prison. What passes for insurgents challenging corporate boards are so-called “activist shareholders” who typically press management for even more manipulation of share prices.

Sen. Elizabeth Warren has pointed the way, with her proposed Accountable Capitalism Act, We also need tougher criminal enforcement. There is plenty of authority under existing law to prosecute corrupt executives. The Justice Department just doesn’t use it.

Kind of makes you wonder who is running the country, and in whose interest—the vast majority that is labor, or the small elite minority that is capital.

Robert Kuttner is co-editor of The American Prospect (prospect.org) and professor at Brandeis University’s Heller School. Like him on facebook.com/RobertKuttner and/or follow him at twitter.com/rkuttner.

From The Progressive Populist, May 1, 2023

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